This is shown in a study by the economist Maher Asal at University West in Sweden. Previous research provides overwhelming evidence that diversifying across countries in a stock portfolio is more lucrative than diversifying by sector. But it has been unclear what is really the case in the euro area. Now Maher Asal has managed to show that investors in the euro area succeed best with stock portfolios containing a balance of shares in different sectors.
Member states in the euro area pursue a joint monetary policy and have a joint exchange rate. However, fiscal policies remain largely domestic matters in the separate countries. The spread of economic troubles in one euro country to other euro countries has been a recurrent theme in news reports recently. What Maher Asal has studied is the impact of the currency union on the stock market. The euro was introduced in 1999, and the study covers the years 1992-2009. Asal compares the periods before and after the introduction of the euro.
“In the pre-euro days stock markets were segmented, so risk-adjusted yields could be realized by diversifying across countries. Now industrial sectors appear segmented instead, owing to differences in taxes and regulations. The sectors are different in character,” says Maher Asal.
Within the euro area currency risks have been eliminated, and interest levels and inflation in the different countries have been leveled. On the other hand, differences between industries have not been evened out. Industrial policies differ for the various industrial sectors. This has consequences for how much is invested in research and development, for example, and how mergers, acquisitions, and bankruptcies are dealt with.
Maher Asal’s study covers 19 sectors, and the results show that shares from three of them are especially important to have in a wisely composed stock portfolio. The three sectors are construction, chemicals, and raw materials, such as forestry and mining. Maher Asal’s findings are based on econometric analyses of more than100 000 observations in databases containing information about share prices, etc.
For more information please contact Maher Asal, + 46 768 509 002, email@example.com
Reference: The Impact of the Euro on Sectoral Equity Returns and Portfolio Risk, Asal, M, International Advances in Economic Research, Volume 17, number 2, May 2011
Charlotta Sjöstedt | idw
The RWI/ISL-Container Throughput Index started off well in 2018
22.02.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
RWI/ISL-Container Throughput Index ending 2017 on a positive note
24.01.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
A newly developed laser technology has enabled physicists in the Laboratory for Attosecond Physics (jointly run by LMU Munich and the Max Planck Institute of Quantum Optics) to generate attosecond bursts of high-energy photons of unprecedented intensity. This has made it possible to observe the interaction of multiple photons in a single such pulse with electrons in the inner orbital shell of an atom.
In order to observe the ultrafast electron motion in the inner shells of atoms with short light pulses, the pulses must not only be ultrashort, but very...
A group of researchers led by Andrea Cavalleri at the Max Planck Institute for Structure and Dynamics of Matter (MPSD) in Hamburg has demonstrated a new method enabling precise measurements of the interatomic forces that hold crystalline solids together. The paper Probing the Interatomic Potential of Solids by Strong-Field Nonlinear Phononics, published online in Nature, explains how a terahertz-frequency laser pulse can drive very large deformations of the crystal.
By measuring the highly unusual atomic trajectories under extreme electromagnetic transients, the MPSD group could reconstruct how rigid the atomic bonds are...
Quantum computers may one day solve algorithmic problems which even the biggest supercomputers today can’t manage. But how do you test a quantum computer to...
For the first time, a team of researchers at the Max-Planck Institute (MPI) for Polymer Research in Mainz, Germany, has succeeded in making an integrated circuit (IC) from just a monolayer of a semiconducting polymer via a bottom-up, self-assembly approach.
In the self-assembly process, the semiconducting polymer arranges itself into an ordered monolayer in a transistor. The transistors are binary switches used...
Breakthrough provides a new concept of the design of molecular motors, sensors and electricity generators at nanoscale
Researchers from the Institute of Organic Chemistry and Biochemistry of the CAS (IOCB Prague), Institute of Physics of the CAS (IP CAS) and Palacký University...
15.02.2018 | Event News
13.02.2018 | Event News
12.02.2018 | Event News
23.02.2018 | Physics and Astronomy
23.02.2018 | Health and Medicine
23.02.2018 | Physics and Astronomy